It lasted less than one day – the State Government’s Mid Year Budget Review forecast for reasonable economic growth was shot down by yesterday’s official economic growth figures.
South Australia’s struggling economy recorded another quarter of negative movement, retreating by -0.5 per cent.
State Treasurer and Premier Jay Weatherill had been more optimistic on Monday, announcing “growth in the SA economy is expected to improve over the forward estimates period towards its underlying trend rate of 2.75 per cent”.
Yesterday’s official figure from the Australian Bureau of Statistics was the fourth negative result from the last six quarters.
The MYBR document had estimated annual growth of 2.25 per cent for this financial year, a figure now unlikely to be achieved.
In the 2012-13 year, an annual growth rate of just 0.8 per cent was recorded.
The official figures had further bad news with federal estimates of GST revenue expected to be revised downwards again when the nation’s Treasurer Joe Hockey hands down his Mid Year Economic and Fiscal Outlook (MYEFO) later this month.
Weatherill’s MYBR had revised upwards the expected revenue from GST for the current and next financial year.
In his analysis of Wednesday’s ABS data, however, Hockey said the latest national economic growth figures point to another deterioration in the federal budget.
Gross domestic product (GDP) expanded by a modest 0.6 per cent in the September quarter and for a below trend annual growth rate of 2.3 per cent.
“Combined with other economic data it is clear that the nominal growth forecasts in the pre-election fiscal outlook will not be reached,” he said.
“This points towards a further deterioration in the budget bottom line.”
Hockey said the September figures showed what sort of economy the Coalition had “inherited” from Labor.
“The fact is the economy is stuck in second gear,” he told reporters in Canberra on Wednesday.
“We have inherited an economy with below trend growth, rising unemployment and a deteriorating budget.”
He said 0.6 per cent quarterly growth was “not good enough to be able to deliver the jobs that people want”.
Hockey said the government had a repair job to do, as well as an economic plan to implement.
“We need to speed up the Australian economy and I would say to our political opponents `now is not the time to oppose the repeal of the carbon tax … or the mining tax’,” he said.
“Now is not the time to play silly games in relation to the budget, because these figures clearly illustrate the fact that budget has deteriorated significantly.”
He said Labor was holding up $18 billion of budget savings the Coalition had promised during the election.
Asked if there would be deep cuts in the May budget, Hockey said: “We’re not obsessed with cuts, we’re obsessed with getting the budget back into good shape, into robust shape”.
“We’re obsessed with growth and job creation.
“If you all asked me 12 or 18 months ago would I inherit this, I would have said `no, it would have to be better than that’.
“But over the last 12 months, so much of what has been promised has not been delivered, and this is what we inherit now.”
Hockey said the government had to “fill the hole” left by the slowing in mining investment.
“What we’ve got to do is find ways to stimulate the non-mining side of the economy,” he said.
“That means re-tooling the nation.”
Infrastructure investment would be a major way to do this.
“That’s going to be a driver of productivity growth,” he said.
“I want to give Australians hope that tomorrow is going to be better than today.”
But Hockey did not rule out cutting public sector spending, saying Australians would have to wait to find out about his plans in the mid-year budget update.
The update is due before Christmas.
The economic deterioration also poses another problem for the Weatherill State Government.
The MYBR indicated that the $8500 Housing Construction Grant, set to expire on December 31, did not need to be extended.
The review said “recent state final demand statistics confirm an improvement in housing construction is now under way”.
Yesterday’s ABS figures show a slight improvement in private dwelling construction, but still well short of previous years figures.
There was little or no movement in non-dwelling construction.
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